Sujal Patel knows a thing or two about tech startups.
The veteran Seattle entrepreneur co-founded Isilon Systems in 2001, helped take the storage company public five years later, maneuvered it through the global financial crisis, and sold it for $2.25 billion in 2012.
Four years later he helped launch Nautilus Biotechnology, a proteomics company that went public in 2021 and aims to transform drug development.
Patel is also an investor, backing more than 85 startups, and is a strategic director at Madrona Venture Group.
He was the featured speaker at an event Thursday evening in Seattle hosted by Stifel Venture Banking and Wilson Sonsini, and shared several startup tips from his experience as a founder and investor.
Product-market fit
Founders absolutely need to focus on product-market fit when they launch a startup, Patel said, calling it “a complex beast that encompasses a number of things.”
- Your product needs to be 10X better than other solutions. Being 2X or even 5X better is not good enough for startups because “there’s so much inertia to stick with the incumbent,” Patel said. “There are so many things incumbents can do to hold on to a customer.”
- The customer needs to care about your product — and there needs to be enough customers willing to pay for it.
- Then there’s the go-to-market strategy. Key questions to answer: How do you get to the customers? How do you acquire them? How do you operationalize them? How do you help grow their business? If that can’t all be done in an efficient and economical way, your business won’t work, Patel said.
Scrappiness
In recent years amid the venture capital boom times, it hasn’t been trendy to be “scrappy,” given the free-flowing nature of fundraising. But startups need to be scrappy, Patel said.
- Patel said he was the “IT person” and “janitor” at Nautilus for several years. “You don’t need to hire people until it’s absolutely necessary,” he said.
- For biotech startups, he advised: “Don’t buy anything new. Everything should be bought on eBay.”
Recruiting and hiring
At some point in a company’s journey, though, you will likely need to hire. Patel told multiple stories from his time leading both Isilon and Nautilus when he had to go to great lengths to woo executives to join his company.
- “You have to tell the story of why your business is so interesting,” he said. “Why is this an incredible opportunity, now? You’ve got to make that case really, really compelling. And you have to be pretty dogged about it.”
- Patel doesn’t always look at experience when assessing potential hires. Other important questions to ask include: What are their personality traits? Do they work well in an unstructured environment like a startup? Are they passionate and willing to work their tail off? Are they on a growth trajectory in their career?
Avoiding burnout
Patel was asked about balancing life outside of work with the demands of running a startup.
- “You have to hire great people,” Patel said. “You have to give them clear goals and make them accountable. You have to have open and honest communication. You have to give them rope and you have to teach them how to do it, and not do it for them.”
- But even with great colleagues, at the end of the day, founders ultimately are responsible for the company. “The CEO job, in a lot of ways, sucks,” Patel said. “You have all the stress and the buck stops with you.”
- Patel’s advice is to stretch out the physical workload. And to try and dedicate time for family, particularly if you have kids. “It goes by fast,” Patel said.
Perseverance
Every company will go through hard times. But founders can’t give up if they ultimately want that big exit or sustained growth.
- Patel recalled running Isilon during the recession and having to rebuild his management team, or navigating Nautilus through the market swings in the pandemic.
- “As a founder, you have to persevere,” he said. “You have to push through it.”
- On the hard days, founders need to exude confidence and calmness. “You have to put on a strong face so that everyone else around you who is nervous looks at you and says, ‘OK, if you’re comfortable, maybe it’s going to be OK.’ And that is really hard to do.”
